People are grappling with market turmoil after Friday's equity slide, but there was a good deal of action in another financial instrument: Bitcoin.

Bitcoin moved down some 10 percent on Friday after one of its significant developers, Mike Hearn, claimed in a startling blogpost that the cryptocurrency was now a failure.

Hearn used a publishing platform, Medium, to make his announcement, writing, "Despite knowing that bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly."

Hearn's views are reportedly aligned with Gavin Andresen, another famous developer. The controversy pits Hearn and Andresen against other developers over the issue of whether – and how – processing speed for bitcoin "blocks" should be expanded.

Each block has a one-megabyte "artificial" processing capacity that only allows three payments per second. According to Reuters, Hearn and Andresen are now said to be promoting their own bitcoin software, called Bitcoin XT, which provides 24 transactions per second. The software would reportedly expand the number of transactions year over year.

There's a sticking point, however. Computers that "mine" bitcoin, many of which are in China, aren't using the new software. Reuters interviewed Hearn in December and quoted him as saying that, "if an IT system runs out of capacity ... then all kinds of things go wrong – all hell breaks loose."

Hearn also said that, "The current price of bitcoin is supported almost entirely by people speculating on its future, in the assumption that this could be the money of tomorrow ... So if the network starts to collapse, then a lot of people are going to look at it and say: well maybe we've miscalculated (its) future value."

The programmer's open letter was big news, with mainstream media outlets such as The New York Times, The Guardian and Fortune reporting on his decision. Hearn's language was in fact dramatic if not apocalyptic:

"Why has Bitcoin failed? It has failed because the community has failed. What was meant to be a new, decentralised form of money that lacked 'systemically important institutions' and 'too big to fail' has become something even worse: a system completely controlled by just a handful of people."

Critics of Hearn maintain he has ulterior motives, as he is working with a group of banks, now said to number around 40, to revise the blockchain technology supporting bitcoin and to generally make bitcoin more banker friendly.

Given Hearn's affiliation with banking startup R3 CEV and his emotionally charged language, it was easy for some in the bitcoin community – never enamored with large banks – to claim a conflict of interest. In fact, fingers have been pointed since Hearn joined R3 last year.

But Hearn's recent statement obviously aggravated a growing rift and the reaction has been significant. In addition to the sell-off, Hearn has now been branded a "blatant liar," and his recent post has been characterized as "whiny." Developers such as Eric Lombrozo have provided rebuttals.

Lombrozo was quoted recently by CoinDesk as saying that developers can now deploy bigger blocks, "in a way that is backwards compatible and is practical and safe and can be rolled out soon."

Here at The Daily Bell, I've always been a bit skeptical of bitcoin because of what I considered to be an over-enthusiastic portrayal by supporters. For instance, we pointed out that the TOR facility that is supposed to keep bitcoin transactions anonymous was developed by the US military, of all groups. And we predicted long ago that bitcoin would be afflicted with continued, serious security breaches and embezzlement. All that has taken place.

Gold, physical gold especially, is a proven money medium when it comes to anonymity and liquidity. Around the world you can always find someone to buy and sell gold. And if you don't want to deal with public, regulated channels, you can arrange private transactions.

I have no axe to grind with bitcoin, but I've never thought of it as a replacement for precious metals, even though some have been intent on characterizing it that way.

Gold and silver have been around for thousands, perhaps tens of thousands of years. And as we just pointed out yesterday, if the West enters a period of prolonged stagflation, people will once again discover just how valuable owning gold can be.

Given the current market turmoil, you ought to consider precious metals if you haven't before, or contemplate adding to what you have. Not just physical metals, either. Junior miners such as Seabridge – a company we've covered in the past – may prove lucrative if the mining sector heats up. And physical gold and silver have retained their value since ancient days.

Historically, the record is clear. Gold and silver have a place in your portfolio.